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PHOENIX -- Arizona is in the midst of what seems like an intense election-year campaign:
millions of dollars in spending, a barrage of negative TV ads and large amounts of outside money.
The issue, however, has nothing to do with taxes, a hot-button policy or anything on the ballot.

It is about the future of rooftop solar power in a state known for its abundant sunshine and
at a time when the industry is booming.

The state's largest utility, Arizona Public Service, has spent more than $3.7 million to
convince the public that homeowners using solar panels are costing other customers money, and it
wants utility regulators to OK a proposal it says would make the system more fair.

The solar industry, on the other hand, has spent at least $370,000 on its own ads, arguing
that the utility's proposal would increase rates for those who use rooftop solar power and decrease
competition.

The Arizona Corporation Commission is meeting today to discuss the issue in what promises to
be a heated debate. The outcome by the five-member commission with final say over APS rates is
being watched by utilities nationwide and could affect the solar industry's future.

That's because utilities are pushing the same arguments elsewhere, and a victory in Arizona
could create momentum for their policies.

Arizona Public Service says homeowners with solar panels are benefiting from the grid's 24-7
power supply but avoiding much of the costs of maintaining power plants, transmission lines and the
distribution system.

Under the current system, homeowners are able to cut their bills by selling excess power at
full retail price back to APS in a practice called "net metering." Combined with using the power
from the panels themselves, net metering can cut their bills by about two-thirds.

APS says that effectively shifts the costs of operating the huge power distribution grid to
homes without solar.

It is proposing changes that would effectively cut that benefit by either charging more for
power that homeowners with solar use or cutting what it pays for the excess solar power sent back
to the grid. Existing solar installations would be exempt from the changes for 20 years.

The solar industry says APS is worried it will lose revenue if solar continues to grow, and
the company's proposal would decimate the industry by making it a losing proposition to install new
solar panels.

The industry group, The Alliance for Solar Choice, said APS is misleading the public and just
wants to boosts its profits. It says APS's cost-shift estimates of $1,000 a year for each
solar-equipped home - currently $20 million - leaves out a much larger benefit that more than
offsets that cost.

They cite a study they paid for that says savings on new power plants, reduced investments in
new power lines and savings from meeting renewable energy standards actually will save APS $34
million in 2015.

"APS is not a ratepayer advocate, and their arguments are absolutely incorrect," said Bryan
Miller, president of Alliance and vice president of public policy for solar company Sunrun, Inc.
"APS is just trying to eliminate competition."

APS spokesman Jim McDonald said the company has never seen anything like the solar industry
ads, saying "they distort the facts, they mischaracterize our proposals and they tell lies about
the company. We have to respond."

Many utilities across the nation are pushing the same argument as APS, as is the utilities'
national association, the Edison Electric Institute. Edison made a major television ad buy in the
past week that echoes the APS arguments.

APS has also poured money into two outside groups that don't disclose the company's role. The
groups have in turn run negative TV ads against the solar industry. APS later acknowledged its
donation to the groups.

APS has about 20,000 homes in its service territory with solar panels and the company says
500 more are being added a month. A subsidiary of Pinnacle West Capital Corp., the utility serves
1.1 million home and business customers across Arizona.

While APS has supported net metering as a way to boost the industry and meet requirements for
renewable power, McDonald said the number of users is growing so fast it will soon be
unsustainable.

"We need to do it now while it's very manageable," he said of the proposed changes. "Later on
it will be much more difficult."

The state's ratepayer advocate recommends a small monthly fee imposed on APS customers to
offset the costs of running the grid, rather than the change in net metering that APS wants.

Catherine Wolfram, co-director of the Energy Institute at the University of California,
Berkeley, said APS is right when it says solar users shift costs to non-solar customers.

She said utilities are worried about a vicious cycle - more rooftop solar panels means they
have to raise other users' prices, which drives even more people to solar. She also said the
installations are more common in affluent areas, shifting costs to poorer customers.

The APS proposal would in effect lower the "subsidies" for solar users and would surely make
solar less affordable and cut demand for new installations, Wolfram said. "The viciousness of the
fight indicates how high the subsidies have become," she said.